Effects for Fee-for-Service Systems in Clinics

Effects for Fee-for-Service Systems in Clinics

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Effects for Fee-for-Service Systems in Clinics

The American healthcare system has for a long time been subject to a fee-for-service system which has proven too expensive for patients in the long run. There has been reported out of control spending that has prompted a major shift in service delivery and payment policy due too much payments for low-quality services (Kelly, 2011). The fee-for-service (FFS) refers to a traditional healthcare patients’ payment model whereby healthcare providers are reimbursed by in insurance companies and government agencies in relation to the number of services provided (Hatchett & Coaston, 2018).

In this system, services ate paid separately based on each instance a patient has a doctor consultation, surgical procedure, or a hospital pay. The problem is that there has been too many payments from patients for similar subsequent healthcare services making healthcare services unaffordable (Ikegami, 2015). In 2010, these concerns prompted an intensive review of the healthcare payment system that has been in place for decades. As a result, the Affordable Care Act (ACA) of 2010 set in motion a new proposal for value-based care that would at least replace the oppressive traditionally broken fee-for-service system model in clinics (Guo et al., 2018).

This research study is going to explore the following aspects that have affected the fee-for-service model in a clinic setting and what should be done to fix or replace the model. First of all, the model has been antiquated by the evolution of medicine. Secondly, there has been encouraged overutilization of the model by third-party payers, and finally, the model has resulted to fragmentation for patients and doctors within the healthcare systems. Clinical services have been largely affected by the fee-for-service model as the fragmentation of services and payments attributed to each fragment has led to rise in cost for healthcare which many Americans have found unaffordable.

When it comes to the antiquation or change phenomenon, researchers outline that modern medicine practices in clinics and other healthcare facilities are faced with complexities. The traditional fee-for-service payment model may have worked five decades ago but it has become cumbersome today (Kelly, 2011). The traditional fee-for-service (FFS) model capacity has been outdated by the chronically ill patient populations today. As a result, there is need to shift from the FFS to a value-based patient care model (Miller & Mosley, 2016). An instance where third-party payers such as insurance companies and government agencies are billed for each test, visit, procedure, consultation, and treatment provided to a patient has become cumbersome. The fee-for-service model was sufficient in the 1960’s but it was highly supported by trivial inflation at the time (Ikegami, 2015).

According to assertions made by Hatchett & Coaston (2018), the evolution of medicine has made lawmakers want to change the FFS payment model. From a patients’ perspective, the model has led not only to uncontrollable healthcare expenditures, but also overprovision and inefficiency in clinic healthcare system. According to Kelly (2011), one main support to this argument is that considering that the FFS has been made to a ‘cash-cow’ for physicians, they have resulted to delivery of more and unnecessary services to patients which in turn maximize their earnings. Generally, just like Miller & Mosley (2016), the FFS payment model in clinics and other facilities has been criticized for being a façade where physicians hide their self-interests with limited value-based care being given to patients. It is a system that has created greed for a section of physicians to over-utilize the healthcare system in making more money for themselves.

There are a number of arguments presented by physicians who support the continued usage of FFS model. Some claim that they are merely compensated for provision of quality and best care to patients based on their professional standards. Others claim that it provides an opportunity for acts of charity as they waive or decrease payments for those patients that cannot afford healthcare services (Ikegami, 2015). There is need for physicians to earn a ‘comfortable income’, however, not at the expense of the healthcare recipient by imposing charges that are imbalanced to the value of care accosted to them.

The FFS payment model has been largely unregulated with physicians being given dominant control on what is to be paid and its frequency per patient. However, the blame cannot be entirely directed to the physicians, but also to third-party payers, that is, government agencies and insurance companies. These parties have affected the FFS model by creating a payment structure that cause both patients and physicians to over-utilize FFS model. In the process, value based care and cost efficiency in healthcare have been largely ignored or rather side-lined (Hatchett & Coaston, 2018).

A high level of spending and overuse of medical services have been promoted by the FFS structure set in place by the third party payers, leading to physicians taking advantage of the negligence posed. For example, third party payers tend to control the price of reimbursement to physicians (van Weel et al., 2018). An instance where they lower these reimbursement to save themselves money, then physicians increase medical service activities on patients which require more compensation that patients have to incur either directly or through the same third party payers.

The other way that delivery of services has been affected by FFS model has been through the isolation phenomenon. This is the argument that the FFS model has led to creation of a fragmented environment in the healthcare system which affect both patients and physicians. In regards to this argument, physicians remain ‘isolated’ in provision of healthcare to patients since there lacks incentives that can enable them collaborate with others in the patient-care continuum (Guo et al., 2018). When a lack of integration in the medical system is created. It means that the system has prompted the doctor to do most of the things isolating others on the team due to the role paid by his request for payment as an individual leading to a fragmented environment.

There is need for interventions by all healthcare stakeholders ranging from third party payers, patients, healthcare managements, and physicians to come up with alternative payment models that will strike a balance on what healthcare services should cost, how much they should be charged, how much constitutes a ‘comfortable’ income for physicians, and how collaboration can be made to streamline the creation of an affordable healthcare system (Miller & Mosley, 2016). According to Guo et al. (2018), there is need to change a payment system where healthcare providers get paid for the medical services provided irrespective of the clinical results that each service yields. The FFS model provides little differentiation between ineffective and effective encounters in service provision and has partial accommodation for value based care.

The creation of value-based reimbursement models which largely emphasize on clinical outcomes is one way to ensure that physicians are accountable and patients and third party payers get value for their money. One way to go about it could be a collaborative approach where a specific performance criteria can be used to determine goal attainment and quality service care to patients (Hatchett & Coaston, 2018). In addition Kelly (2011) is of the view that a ‘shared risk’ contract negotiation where both the patient and the healthcare provider share the cost of medical service is reached upon. There is need to incorporate payment models that fall within the confinements of Population Health Management designed to improve overall healthcare for patients while ensuring that minimum cost is incurred by payers.

One alternative that the United States government can implement in full capacity is a Value-based care payment also known as Diagnosis-Related Groups (DRGs) introduced in 1984 with aim of replacing the FFS model. In this model, a one-time effect that is able to contain inpatient care costs (Kelly, 2011). Moreover, it will remove the fixed budgets that cause long waiting lists as an incentive in clinics. In actual sense, the value-based care will lead to physicians being paid based on the successful treatments that they have made on patients, rather than the number of medical activities that they are involved in.

Alternatively, the pay-for-performance (P4P) model would also prove an effective replacement that will enhance performance and reduce unnecessary replication of medical costs. It will also act as a motivation to physicians as it entails giving bonus payments to physicians who achieve predetermined clinical targets. This model will be effective in place of a reliable performance evaluation criterion that third party payers and healthcare managers can be able to evaluate (Ikegami, 2015). The application of both DRGs and P4P will require a well-designed patient classification, recording, identification, and monitoring system.

In conclusion, in a bid to decide on the best payment model that will reduce healthcare costs for patients while ensuring a motivated physician workforce, there is need for all stakeholders to agree that FFS has multiple replication of payments and forced overutilization of medical services, and that adoption of a new payment model must be harmoniously designed to accommodate the views of stakeholders. The introduction of a team-based that ensure provision of proactive care to prepared patients will prove essential. In addition, increased vigilance and communication with patients by physicians even when they are not in office will act as an effective way of medical care follow-up that does not necessarily require patient-to-hospital visits that get charged. The transition from FFS model to value-based care integrated with P4P model will prove an efficient way to ensure performance by physicians and minimum costs for patients in clinical services provided to them.

Annotated Bibliography

Hatchett, G. T., & Coaston, S. C. (2018). Surviving Fee-for-Service and Productivity Standards. Journal of Mental Health Counseling, 40(3), 199-210.

In this journal, the author makes an explorative analysis of how community mental health administrators have continued to rely heavily on fee-for-service (FFS) models in evaluating clinical staff performance. The healthcare journal goes ahead to outline different financial risks under the fee-for-service model that are associated with missed appointments and premature termination of services. The potential negative consequences that come with FFS have been explored in a twin phenomenon approach based on productivity standards for physicians. It goes ahead to outline how multiple stakeholders in the healthcare system are affected negatively and offer strategies that can be used by counsellors in clinical mental healthcare to reduce financial implications for patients.

Ikegami, N. (2015). Fee-for-service payment–an evil practice that must be stamped out?. International journal of health policy and management, 4(2), 57.

In this journal article, Ikegami presents the fee-for-service (FFS) payment model as a retrogressive system that has to be overhauled and replaced with a value-based payment method. The article suggests that the system is marred with a lot of aspects that lead to eventual increased healthcare costs for patients. Physicians have been presented as taking advantage of the FFS in replicating Medicare services so as to get more payments from different fragmented payments. In a bid to control volume and costs in clinical services, the article advocates for adoption of new payment methods such as P4P and DRGs models. It also blames the evolution of drugs and overutilization of FFS by third party payers as core in advantaging physicians to increase FFS charges.

Guo, P., Tang, C. S., Wang, Y., & Zhao, M. (2018). The impact of reimbursement policy on social welfare, revisit rate, and waiting time in a public healthcare system: Fee-for-service versus bundled payment. Manufacturing & Service Operations Management.

This is a journal that examines two main reimbursement schemes, the Bundled payment, and Fee-for-Service. It explores the public healthcare system with keen association of patient revisit rates, quality of service and its payment, and patient waiting time. In these two schemes, the article reviews the aspect of patients paying for services each time they visit the physician and the cost they incur, in comparison to a bundled payment that physicians are paid in lump sum after total service provided in a month. The article presents the bundled payment model as better in provision of higher social welfare, less costs for patients, and lower revisit rates, compared to the FFS scheme which only prevails in lesser waiting time for patients since physicians want to serve more patients to get more money. The comparison between the two schemes provide a clear picture on the challenges that FFS model pose to cost and value of care given to patients.

van Weel, C., Turnbull, D., Bazemore, A., Garcia-Penã, C., Roland, M., Glazier, R. H., … & Goodyear-Smith, F. (2018). Implementing Primary Health Care Policy Under Changing Global Political Conditions: Lessons Learned From 4 National Settings. The Annals of Family Medicine, 16(2), 179-180

In this healthcare journal, the aspect of healthcare systems struggling with affordable healthcare spending has been explored. It associates Fee-for-Service (FFS) to poor access to healthcare for most people, low quality healthcare services, and overmedication by physicians as a strategy of maximizing of FFS in increasing personal income. It advocates for alternative payment models under Primary healthcare (PHC) in reducing healthcare costs, enhancing equity, creating value, and improving efficiency in healthcare provision. Different healthcare policies under PHC attributed to enhancing affordable health spending have been outlined.

Miller, P., & Mosley, K. (2016). Physician reimbursement: from fee-for-service to MACRA, MIPS and APMs. The Journal of medical practice management: MPM, 31(5), 266.

This journal makes an extensive exploration on different payment models that range from MIPS, APMS, to MACRA. It goes ahead to advocate for transition from Fee-for-service model to the other payment models explored. It outlines the FFS as encouraging volume in service provision and low quality in the process. It advocates for value replacing volume as well as introducing a payment model that is going to be performance based. It explores how the utilization of Medicare Access and CHIP Reauthorization can enhance further changes in creating desirable and balanced physician compensation models.

Kelly, C. B. (2011). Policy substance or simplified politics? How the healthcare reform public option was portrayed in newspaper editorials. ProQuest Dissertations and Theses, 72. The University of North Carolina at Chapel Hill.

This article is a presentation of a thesis by Kelly from the University of North Carolina. It advocates for healthcare reforms in newspaper editorials using a quantitative content analysis to explore cost control in healthcare and the portrayal of healthcare in newspapers. It explores the Affordable care Act as an alternative that was introduced to the public against the private health insurance policy which proved expensive. The public option is presented as a system that was supposed to offer basic coverage at low costs while ensuring that those in private sectors received fair rates by providing fair competition. The article presents a history of healthcare reforms and how different policies have over the years led to affordable care. However, the influence of media in policy debates has also been largely explored and how they have contributed to policies that affect the cost of health care.

References

Hatchett, G. T., & Coaston, S. C. (2018). Surviving Fee-for-Service and Productivity Standards. Journal of Mental Health Counseling, 40(3), 199-210.

Miller, P., & Mosley, K. (2016). Physician reimbursement: from fee-for-service to MACRA, MIPS and APMs. The Journal of medical practice management: MPM, 31(5), 266.

van Weel, C., Turnbull, D., Bazemore, A., Garcia-Penã, C., Roland, M., Glazier, R. H., … & Goodyear-Smith, F. (2018). Implementing Primary Health Care Policy Under Changing Global Political Conditions: Lessons Learned From 4 National Settings. The Annals of Family Medicine, 16(2), 179-180.

Guo, P., Tang, C. S., Wang, Y., & Zhao, M. (2018). The impact of reimbursement policy on social welfare, revisit rate, and waiting time in a public healthcare system: Fee-for-service versus bundled payment. Manufacturing & Service Operations Management.

Ikegami, N. (2015). Fee-for-service payment–an evil practice that must be stamped out?. International journal of health policy and management, 4(2), 57.

Kelly, C. B. (2011). Policy substance or simplified politics? How the healthcare reform public option was portrayed in newspaper editorials. ProQuest Dissertations and Theses, 72. The University of North Carolina at Chapel Hill.